COMMONS AMENDMENT

My Lords, I beg to move that this House doth disagree with the Commons in their Amendment No. 20, and with the agreement of the House I shall speak also to Amendment No. 21 because that is the substantive amendment; the other is really a paving amendment. When this Bill left this House—and on the whole I think that it had a very happy passage through this House—I think that we all on both sides, including the Minister, who was extremely reasonable and helpful all through the Bill, felt that we had sent it to another place in a very good condition. Most of the amendments that have been made today, with the exception of the ones that I am speaking to at the moment, and also one further on, have really been to tighten up the legislation so that it will be possible to introduce the very positive procedures which were envisaged. However, I am very gravely disturbed about the fundamental changes which have now been made to the Bill in another place, and I must say that they have been made to the great disadvantage of the Bill. I refer to the whole question of compensation which, when the Bill went to the other place, was to be contained in regulations and not in the primary legislation.

Perhaps I may quote what the Minister said on Second Reading at col. 501 of Hansard of 22nd January when he was referring to Clauses 11 to 16. He then said:
At present, if a local planning authority makes an order modifying a planning permission for mineral working, then the operator is entitled to compensation for any abortive expenditure, loss or damage incurred. The Stevens Committee recommended that operators should not be automatically entitled to claim compensation for loss resulting from modifications made as a result of a review, and in discussion with the industry on this recommendation there was a measure of agreement that the operator should bear a reasonable amount of the loss or damage in each case. The difficulty is, of course, in deciding what is reasonable. The basic principle we have in mind, is that for each mine or quarry, a threshold should be set in relation to its annual output and expected life".
In the interests of brevity, I shall leave out the next couple of sentences. The Minister then went on to say—I think very rightly:
The setting of such a threshold is a difficult exercise, and indeed different thresholds may be needed for mining and quarrying and for different types of order. My department issued a consultation paper on this in September last year, and responses are still being considered".
I hope that the House will note this particular sentence:
Because of the complexity of the issue, we do not believe that it would be right to include the details of the threshold in this Bill, but instead we are proposing a power in Clause 15 to make regulations which will provide when compensation is to be payable—that is, what should be the threshold, and the basis on which compensation is to be assessed when the threshold is passed. In addition, by making this the subject of regulations, a measure of flexibility will be provided, so that the formulae can be updated from time to time. However, the Government recognise the vital importance of the compensation provisions to both the industry and local authorities, and therefore it is proposed that the regulations should not come into operation until they have been approved by your Lordships' House and in the other place.
Further, in winding up that debate on Second Reading, the noble Earl, Lord Mansfield, referred to some
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of the points that had been raised about the proposed regulations in relation to compensation. Here I think that I should make the point that I and others were concerned that by the time we reached the Third Reading of the Bill and the Bill was passed, we should have had a chance to see the regulations. The noble Earl repeated what the Minister had said earlier about the consultation paper being issued to local authorities, and at col. 530 he reiterated:
The formula is likely to be both complex and detailed and is, therefore, not really suited to primary legislation. Equally important, the formula is likely to need to be changed from time to time—in other words to be updated—and regulations provide a certain flexibility in this regard which primary legislation certainly does not. We do not want to impose too great a burden on either industry or mineral planning authorities. Nevertheless, because of the importance of the regulations, they will be subject to the procedures of an Affirmative Resolution of both Houses".
I then made an intervention on this, but it was concerned with having a sight of the original regulations and I made it quite clear that I was not at this point talking about the future.

The position is that the Bill has been returned to us with almost a new clause which now puts into the primary legislation—and this is a complete legislative somersault—what was to be left to regulations, that is, the percentage on which the compensation will be based. As regards the operators, the prescribed percentage shall not be more than 10 per cent. In our discussions—and I must apologise that I do not have the reference with me at the moment—it was said that the percentage for the operators should not be more than 20 per cent.; in fact, in another place on Third Reading of the Bill a right honourable Member on the Front Bench, Mr. Gordon Oakes, then said that it was generally accepted that the top figure would be 20 per cent.

My objection to this is on two bases. First, I object that this has now gone into the primary legislation. It is not only contrary to the views expressed on these Benches—and as I understood it at the time, I thought that there was agreement from the Liberal Benches as well—but also that the figure has now been made very much lower for the operators and, once again, a great deal of extra financial liability will be put on local authorities. This is very bad and extremely dangerous. It means that local authorities—which we know perfectly well are being squeezed all the way round all the time—will be left with an enormous price tag to pick up or, indeed, may not be able to do it at all. It also means—and this does not apply only to the large operators—that because some of the smaller operators will do a minimum and may not even fulfil the quota that has been set for them, there will be an enormous amount that local authorities will have to do and will be literally unable to do.

As this whole Bill is of such tremendous importance for environment and the extraction of minerals—and I think it was mentioned many times on both sides of the House that this is the first time since 1947 that we have had a Bill of this sort—we are extremely concerned. This was an extremely good co-operative exercise from both sides of the House in trying to get this Bill right. The Bill introduces some new concepts and procedures about which there is little experience, and the local authority associations will meet departmental officials to try to map their way through what
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is, in many aspects, unknown territory. The local authority associations—particularly the AMA—have expressed very deep misgivings about the new 10 per cent. ceiling introduced by the Government and, I am quite certain, introduced as a result of the pressure brought to bear by the CBI on Members of Parliament. They are, of course, quite entitled—I am not saying that they are not—to bring any amount of pressure to bear, but I am objecting to the fact that the House should have given in and responded to the pressure in this way, and turned upside down what, in fact, was said not only, by this side of the House but by the Minister, who made a very reasonable case which was entirely the opposite of what is now in front of us.

As we are all trying to make this Bill work and to improve conditions on sites with very old permissions, surely it would be far better to discuss the compensation mechanism—we have now been told by two Ministers in this House that it is very complex; we are all aware of that, and it still needs discussion—and finally, to bring it before the House in the form of regulations.

That is why I move this Motion instead of simply deleting the 10 per cent. and putting in 20 per cent. I think that this is by far the best way to do it. Then, it only needs to be done by order in the regulations. We do not need to have any more legislation if it is felt that those percentages should be changed. If we set the ceiling in the legislation, then, as your Lordships will realise, it will be very difficult indeed to make suitable amendments to the Act—much more difficult than to amend the regulations.

I repeat without apology that the idea of a ceiling in the Bill was resisted in this House originally. I know that the Minister is very reasonable and was as anxious as I was to get a really good piece of legislation through in this field. I hope that he will accept this Motion which puts the Bill back exactly as it was when it left this House.

I have received very strong representations not only from the AMA but from individual authorities where there are mining operations, that the limitation on the payment of compensation by local authorities will be further diluted because compensation will always be payable if a new condition should,
in any way restrict the total quantity of minerals to be extracted".
With such an amendment, one wonders whether there will be any circumstances in which the local authority does not have to pay compensation. Although I have not moved today an amendment to delete another Commons amendment, the provision in the Bill which is set out in Amendment No. 23 does tie in with this to some extent. It means that any condition which restricted the output on any one individual day would attract full compensation. This will put more and more pressure on local authorities. In addition, they will be squeezed for cash. Because of this I am concerned that it will not be done at all. I very much hope that the Minister will accept that it is now not too late in the day to put what he originally wanted back into the Bill and therefore to return it to the form it was in when it left your Lordships' House. I beg to move.

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Moved, that this House doth disagree with the Commons in the said amendment.—(Baroness Birk.)

My Lords, when this Bill first came to your Lordships' House, it was the result of a firmly established compromise which the Government had reached between the pressures of two well-recognised and thoroughly respectable groups, the environmentalists on the one side and the mine-owners on the other. We on these Benches, like the majority of your Lordships' House, thoroughly approved of the work which had been done behind the scenes to produce an extremely good Bill and an agreed step forward in this particular field. It was on that basis that my colleagues on these Benches and I helped the Government to repel any amendments which were put forward by either side. All this work having been put into the compromise, we thought that it should go forward. Therefore, we consider that it is a great pity that, having gone to another place, the Government have given way on this point.

We could start arguing from scratch the various cases for one percentage or another or one length of time between reviews and another. Indeed, my honourable friend in another place, Mr. Penhaligon, said in Committee that he would have preferred to have 20 per cent. but also 10 years for review, and between reviews. This afternoon that particular option is not in front of us. We are back to the choice as to whether we should stick to what was in the original package and which we in this House supported in good faith, or whether we should say that there is a sufficient motive on the part of the Government to change it. Quite frankly, we do not think that there is such a good motive. We do not believe that the Government either in another place or here have justified their situation. For that reason, we support the Motion of the noble Baroness, Lady Birk.

My Lords, I am speaking also, as did the noble Baroness, Lady Birk, on Amendment No. 21, which I think is absolutely relevant to this issue. When this Bill was first debated in your Lordships' House, my noble friend Lord Mansfield and I were both pressed to describe the Government's compensation proposals in some detail and, indeed, to include some of the parameters in the Bill itself. Following further discussions with the industry and with the local authority associations, this amendment, 21, was put forward and accepted in another place so that a framework for the regulations on compensation which the Secretary of State is empowered to make under Clause 15 is set out in the clause itself. The compensation arrangements are probably the most complex part of the Bill, and they are also fundamental to its operation. Because of this and because of the noble Baroness's Motion, it would be right to take a few minutes to go over it in some detail and to explain what we have in mind.

Let me begin with the Stevens Committee. After dealing with the need to impose new and up-to-date working conditions on mineral operations which commenced many years ago, at a time when circumstances and standards were different, the committee went on to point out that compensation is normally payable under planning legislation when established rights are altered in this way. The committee recommended that, because of the special characteristics of mineral working, the industry should accept reasonable
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additional costs arising from changes in conditions, and that compensation should not be paid unless the costs incurred by the operator were substantial. Essentially what we shall be seeking to do in the regulations is to define these words "reasonable" and "substantial" in a more precise way.

Our approach is similar to the one suggested by the committee itself and on which I elaborated at an earlier stage of this Bill in this House. We believe that the amount of compensation which the operator is required to forgo should be related in some way to the value of his mine or quarry. At the same time, we want to avoid the need for an individual valuation in each case. We have concluded that a rough and ready assessment of notional value can be arrived at by a calculation which involves the two elements set out in subsection (2C) of the amendment.

The first of these elements is the annual value of the right to win and work minerals at the site concerned. As the Stevens Committee point out, an annual value of this nature is already used in the preparation of the valuation lists and so forms the basis of rating assessments. It is not, of course, as simple as that. I am told that it is likely to be necessary for the regulations to set out at least five different ways of arriving at the annual value from the figure in the valuation list, depending on the nature of the undertaking concerned. Another complication is that valuation lists get out of date—the current list, I am told, came into force in 1973—so the figure arrived at needs to be updated in some way. We have it in mind to start by using an updating factor of four, and then to make provision in the regulations for some form of automatic updating.

The second element in the calculation is a capitalisation factor, to take account of the estimated future life of the working. This will be set out in the regulations in the form of a simple scale table and we propose to base this scale on 8¼ per cent. single rate tables.

As I have said, these elements, when multiplied together, provide a rough and ready assessment of the notional value of the mine or quarry. Having considered very carefully the strong arguments put to us by the industry, we have concluded that it would be right to set out in the Bill itself that compensation for an order under Sections 45 or 51 of the Town and Country Planning Act 1971 should be reduced by no more than 10 per cent. of this sum, subject to a minimum reduction to be set out in the regulations. The minimum figure we currently have in mind is £2,500.

As the noble Baroness, Lady Birk, has pointed out, some of these elements have altered since we last discussed them at the Report stage of the Bill. At that time I said that we were considering abandoning a tapered threshold which had been criticised as unfair to small businesses. This has been done. The maximum percentage of the notional value by which compensation may be reduced has been changed as a result of discussions with affected parties and in another place. But the updating factor to be applied to the figure derived from the rating list has also been increased from 2.5 to 4, and the minimum figure by which compensation is to be reduced has been updated.

What is this new arrangement likely to mean in monetary terms? We have applied this calculation to a 10 per cent. sample of all mineral working heredita-
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ments, with the following results. For the 25 per cent. of sites at the bottom end of the scale, compenstion would be reduced by between £2,500 and £4,000. Other reductions are likely to be: the next 15 per cent. of sites, £4,000 to £8,000; the next 20 per cent., £8,000 to £20,000; the next 20 per cent., £20,000 to £40,000; and the 10 per cent. of sites at the top end of the scale, £40,000 to £100,000. In total, the effect of the changes is to reduce the industry's maximum potential contribution by approximately 20 per cent. We do not regard that as too high a price to pay for their wholehearted co-operation. I should again emphasise that this is on the basis of our current thinking. The amendment put down in another place would enable us to use different updating or capitalisation factors, but it does limit the reduction in compensation to 10 per cent. of the assessment of the amount arrived at in this way.

I know that the industry attach great importance to this limitation. Equally, I know that the local authorities will be disappointed by it. I find it fruitless to argue about this 10 per cent. figure; I believe the question your Lordships should ask is whether the likely reductions derived from our 10 per cent. sample will enable the Bill to operate in a manner which is fair to both sides, and I believe it will. I realise that local authorities will say, as the noble Baroness has, that little can be achieved for £4,000, and I have to accept that it may not enable them to achieve all that they would like. But the evidence available to us suggests that, out of the 35 per cent. of sites included in this lowest band, two-thirds are owned by small, individual operators who cannot afford to forgo more than this level of compensation. I do not believe it would be right to set the compensation threshold at a level that would drive them out of business. Nor, of course, would it achieve anything in terms of environmental improvement.

On the other hand, the industry may consider that we are still asking too much. However, they accepted the basic principle of reduced compensation at the time of the Stevens Report and I hope they are not now going to go back on that. If the industry want long-life permissions, they must accept some obligations to keep environmental standards up to date. I would find it difficult to believe that they cannot find the kind of sums which I have mentioned. After all, as my honourable and learned friend the Solicitor General for Scotland pointed out in another place, national income from mining and quarrying in 1978 was £4,467 million.

Our consultations, which have been going on since last August, suggest that the approach we are adopting is generally welcomed; the argument is about the figures. We shall be continuing our consultations on a number of detailed points, including the right basis for compensation when prohibition and suspension orders are made. The difficulty here is that quarries where working has ceased do not have a rateable value in respect of the minerals. But I hope your Lordships will consider that the amendment provides the kind of framework for the compensation regulations which they were seeking when the Bill was first discussed here.

Throughout the Bill we have tried time and again to find a balance; we have tried to get it right between
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those interested in the conservation aspects, those concerned about the impact on local authorities and those parts of the industry with problems which they raised, and, by and large, as we have gone through, we have somehow reached compromises which in the main seem to have satisfied most people. It is an unusual Bill—certainly it is to me; it is one of nine with which I have been involved in one way or another—and it is interesting in that I think I am correct in saying it is the only one on which, even on anything substantive, there was not a single Division in another place. I believe that is right—that is what I have been informed—and certainly we have not had a Division in your Lordships' House; which is not to say there should not be one on this amendment, if the noble Baroness feels she must press it.

I repeat that what we have been trying to do all along is to get a balance and do what we think is fairest for all concerned. As the noble Baroness, Lady Birk, reminded us, this is the first Bill for some time affecting the industry and we have been anxious to secure one which would make a significant contribution to the whole problem, and in my view it does that. Inevitably, of course, some will be disappointed by what we have achieved, but on balance I believe it is a splendid Bill and in my view the compensation part of it should not present the problem which I know the noble Baroness feels it does.

My Lords, the House will be aware that in this matter I have been advised by the CBI, so noble Lords will expect me to talk in terms of their thinking. The amendment is welcomed by industry and by the mining industry in particular. The clause as originally drafted gave to any Secretary of State in effect the right to require any operator to write a blank cheque every five years. It was obviously essential that the basic parameters of the compensation formula needed to be inserted in the Bill so that industry had some idea of what it was being asked to pay, and my noble friend has just given us some useful figures to show just what that might be.

However, it became clear during the prolonged consultations, which have gone on for nearly a year—between the department, local authorities, the Royal Institution of Chartered Surveyors, the Royal Town Planning Institute, the National Coal Board, the mining industry (that is, the private enterprise mining industry) and no doubt many others—that the local authorities would press for the whole burden of the loss and damage arising from amendments to mineral planning conditions to fall on the industry, although the Stevens Report recommended, as my noble friend said earlier, merely a contribution from industry to such costs.

It is clear that since the Bill left this House the Government have acknowledged the necessity for mineral operators to be able to plan well ahead; this need extends to finance as well as to operational planning, and I remember making that point strongly in Committee and at later stages in this House. The search for a satisfactory formula has been long and hard and the Government are to be congratulated on devising the formula in this amendment which does
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something to alleviate the acute and well-founded concern of the mining industry.

To take up a few points made by the noble Baroness, Lady Birk, she referred us back to what the Minister said on Second Reading in this place. That, of course, was before we had any of the argumentation in this House, let alone any of the argumentation in the other place, and I applaud the fact that consequent on the splendid opportunity I had to contribute to this we shifted the Government in their thinking, and my colleagues in another place totally shifted them on this issue. That shows that the Government are wise and understanding and have appreciated that they need to get the proper balance.

The noble Baroness then made the point: poor old local authorities; they will have to bear not the whole cost but more than they thought they would. I ask the noble Baroness to remember that roughly half the rate income of all local authorities comes from unenfranchised business rates, and of course mineral operators pay their share of that just like anyone else. So it is not entirely reasonable to suggest that the local authorities—as it was clear they were hoping to do—should be entirely freed from the burden of having to make a contribution, on which the amendment now puts a limit. I hope therefore, if it comes to a vote, that my noble friends, and indeed the whole House including the Liberals, will vote "Not-Content".

I take it, my Lords, that when I press the amendment the noble Lord, Lord Mottistone, will not be a Teller on my side. It might be convenient if I dealt first with some of the points he made, before coming to the Minister's remarks. Lord Mottistone referred to "the splendid opportunities" he had had in your Lordships' House and to some remarks made on Second Reading. It was in order to save the time of the House that I did not go through some of the other points that were made and the other splendid opportunities which the noble Lord took and which, I am glad to say, were not at all successful in this House. In fact, we did not give way to pressure in this House, as unfortunately they did in another place, and that is exactly the beginning and end of it. It is a very sad tale. The noble Lord spoke about the poor, old local authorities and the business rates. The poor, old local authorities are being so squeezed by the present Secretary of State that they do not know where to turn, and even the business rates will not help them very much.

I thought that the Minister made as good a case as he could in trying to defend the indefensible. I sympathise with him; Ministers often have to undertake this wretched task. As a Minister one has to do a somersault in regard to what one said earlier and often over what one originally believed. One has to be convinced that the exact opposite is now right. I say to the Minister that he was absolutely right in what he was earlier arguing all through the progress of the Bill in this House, and the balance that was then achieved between us was entirely correct.

It is not true to say that there would have been an unfair burden on the operators and too little a burden on the local authorities. I repeat again the point that one of the problems involved does not always concern the big firms, which on the whole are extremely efficient in clearing up, and which have a sense of the environ-
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ment and of the quality of life. On the smaller sites, that are not usually run by the big firms, many improvements need to be made while operations are going on or when they are finished. Therefore, the contribution that has to be made in those instances simply must be higher. In these circumstances the rate of 10 per cent. is really ludicrous. Many of the local authorities, which pick up the tab afterwards—and I repeat this point without apology—will not be able to implement provisions. The contribution from the operators—the noble Lord, Lord Mottistone, omitted to mention this—will be extremely low. In their contribution they can include the overheads of the whole scheme, and so they will get a very good deal out of it.

There are two points involved here, one about the figures, and the other about the matter being included in the regulations. As I explained earlier, I think that we should go back to the regulations because that would make much move sense merely than deleting 10 per cent. and inserting 20 per cent. The Minister said that figures become out-of-date. That is absolutely true, and that is why it makes much more sense to have the regulations. The Stevens Committee recommended 20 per cent. as a kind of base, and even that was not considered a great and outrageous burden on the industry. I did not move any amendment proposing that the operator should meet a third of the cost.

The Minister said that he considered that what is being proposed was fair to both sides. It is not fair to both sides. But whether it is fair to certain vested interests, be they environmental interests or business interests, is not really the crucial point. The importance of the balance is what it does to the whole country, to our countryside, to industry, and to the entire environment. That is why it would be such a tragedy if the Bill were to become an Act of Parliament in its present state. If that were to happen, if I am not successful in my Motion, which I intend to press, there will be a detrimental and devastating effect on the whole environment. I find the situation quite tragic, because I agree with the Minister that throughout the passage of the Bill we all felt that we were finding the right balance, that we were doing the right thing by the operators, while at the same time we were protecting and safeguarding the environment. I do not think that I can add anything to those remarks, and I intend to press my Motion.

My Lords, I feel that the noble Baroness spoiled her case by exaggeration at the end of her remarks when she said that if the Bill goes through as it is, it will have a tragic effect on the whole of the environment. My goodness! I look at the minuscule importance of this aspect in the context of the Bill as a whole. I look at what the whole Bill is setting out to achieve. The noble Baroness herself said that it is the first time since 1947 that such action is being taken. The Administration which she supported had all those years to do something about it, but did nothing. Now we have come along with an entire Bill which up to the present everyone has said represents a fine advance on what exists. At last someone is taking up the recommendations of the Stevens Committee. We have heard about the figures and the difference between the 10 per cent. and the 20 per cent. But consider the margin, my Lords, and do the sums.
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In some large cases there will be some significance, but that will not be so in most cases, as I illustrated. To say that the proposal would have a tragic impact on the whole of the country's environment destroys the entire validity of the noble Baroness's case, certainly so far as I am concerned.

My Lords, I feel that, with the leave of the House, I really must answer the noble Lord. First, I said that it could affect the whole environment. It is perfectly true that this is the first Bill of its type since 1947. I am not saying that earlier Governments should not have introduced something else; of course they should have done. But if we are to have new legislation, why on earth should we not have it in the best possible way, as it was when it earlier left this House? Any measure that would have a destructive effect on the environment and which we knowingly bring into force through legislation is to be deprecated, no matter how small or how large it is. I do not think that we can get any further on the argument, and I hope that the House will support my Motion.